Phase out Mobile Communication Technology: An Analysis Based on Public Policy and Business Values

Through the progress of communication technology, the mobile services have broughtlots of benefits for our daily lives. However, with the recent advances in cellular communications and new systems being deployed alongside existing ones, an emerging question aboutwhether there still is someneedsfor the legacy infrastructure, in particular the widely deployed GSMsystemsat this moment.Forthe evolution of mobile communication, we have embrace convenience and efficiency offered bymobile service.We confront, however,so many problems after enjoying the benefits. For an example, the exponentially growing demand for wireless traffic hasresultedin availablespectrum shortageand thus national regulatory authorities(NRAs) worldwide are looking to re-farmtheir GSMspectrum to deploy more spectrally efficient technologies such asLTEor 5G. Therefore, both NRAsand mobile network operators (MNOs) need toaddress the re-farming closely and efficiently. In addition, the regulators should contemplate how to balance subscriber protection and re-farming scheme for asmooth transition amongdifferent mobile communication services.In some cases, an easement model can be a practical option to achieve efficient use of spectrum. The FCC allows US mobile operators to decide when to phase out the legacy network. Compared with Taiwan or some countries in Europe, the FCC takes the laissez-faire approach in the termination process with some flexibility. In the light of this,the NRA in Taiwan provides some subsidies to GSMusers to facilitate their migration to more advanced services before the GSMservice licenses expiration in June this year. However, who will derive the benefits? In fact, there are five mobile network operators in Taiwan, but three operators such as Chunghwa Telecom, Far EasTone and Taiwan Mobile offer the GSMservices. Accordingto current subsidy policy, GSMmobile operators will compete each other to decide who can convert those subscribers as many as possible into 3G or 4G subscribers through NRA’s subsidy would the winner of this technology transition. In addition,the NRA phasing out the legacy network confrontssome potential tough issues. For instance, is the economics underlying the operation of the GSMinfrastructure still viable? If it still existsthe potential profits, how can regulator to make choice between consumers and the fast changing market？In fact, the regulators and operators in other countries such as Norway are deciding how to manage a transition towards full network closure, given that machine-to-machine (M2M), voice, and roaming revenue cannibalization work smoothly and continuously. Therefore, the research questionsof this study are to discuss transition policy of mobile technologywith regard to GSMservice termination:1.What strategies need NRAs to assess between limited resources and business values for the suitable time to phase out the mobile communication technology？2.What kind of approaches do NRAs can take between active involvement and laissez-faire in the termination process ？If NRAs take active involvement, they need to think how to get involving in and minimize some negative impacts for those stakeholders.This study adopts literature analysis, benchmarking analysis to review the termination of the GSMmobile network in Taiwan, and examined the GSMtermination in other countries to make a comparison. In order to analyze the decision of GSMtermination from NRA in Taiwan, our study tries to apply the real options approach (ROA) to evaluate the optimal timing of phasing out GSMservice and the establishment of the mechanism for market exit. The reason why this study uses the real options is that ROA is a method an organization’s management makes to expand, change or curtail projects based on changing economic, technological or market conditions. In sum, it offers policymakers some flexibility tocope with changing circumstances.In the recent years, the regulators and mobile network operators over the world confront the GSMtermination issues. However, there has been few studies to analysis the process of termination and proposed policy suggestions for telecommunication regulators to facilitate MNOs’ smooth transition to advanced mobile communications services while protecting subscriber benefits. Therefore, the outcome of the study indicates that the regulators should not adopt administrative means to force consumers into using a specific mobile system and take the laissez-faire method in the termination process.